Budget Issues: Earmarking in the Federal Government

Pursuant to a congressional request, GAO studied the federal practice of designating particular uses for budget revenues through authorizing legislation, also known as earmarking.

GAO found that: (1) earmarked revenues grew from about 40 percent of total fiscal year (FY) 1974 revenues to about 48 percent of total FY 1988 revenues; (2) about 69 percent of the $560 billion in FY 1988 earmarked revenues came from taxes and regulatory fees; (3) 10 programs received about 83 percent of total FY 1988 earmarked revenues; and (4) six agencies received about 84 percent of FY 1988 earmarked revenues, with the Department of Health and Human Services receiving 60 percent of those revenues. GAO also found that earmarking presented such advantages and disadvantages as: (1) increased visibility of cost-sharing arrangements involving program beneficiary payments, regulatory payments, and contributed funds; (2) increased public knowledge and acceptance of the enactment of new or increased taxes or fees; (3) a management incentive for increased collection efforts; (4) relatively guaranteed minimum funding levels; (5) decreased congressional ability to annually adjust program priorities; (6) reduced congressional ability to quickly adjust an individual program's funding level; (7) less frequent congressional reviews of earmarked accounts; and (8) adverse effects on budget deficit reduction efforts.